Unorthodox concepts in HR : Part 4 – Computer-controlled Manager empowerment

In this post, let’s continue our exploration of Unorthodox concepts in Human Resources/People Management. In this series, we are exploring concepts that are unlikely to be found in ‘respectable’ text books (and also not taught in ‘premier’ business schools) but are very much real in the paradoxical world of people management (See ‘The attrition principle’,  'In the valley of attrition'  and 'Sublimation of vision statements' for the previous posts in this series).

People managers provide the last-mile connectivity for people processes and policies. Empowering people managers is a great way to 'customize' standard HR processes and policies to meet the needs of a particular context. Computer-controlled Manager empowerment (CcMe) has evolved as a response to the need (especially in large organizations) for empowering  managers to take people-related decisions while ensuring conformance to organization level guidelines and budgets. 

This CcMe takes many forms. One typical form is  that of a budget cascade, say for annual increments or bonus. Here the manager is free to distribute among his team members the budget that has been cascaded to him in whichever way he wants so long as he doesn't exceed the budget (else the computer won't save his recommendation). In some cases, a default allocation to each employee pre-populated (e.g. based on performance rating and other relevant factors) and the manger can choose whether or not to redistribute.

All this works reasonably well if the manager has a large team and hence he has the room to redistribute. In the case of small teams, this can lead to the managerial discretion becoming more of an illusion! Yes, in some implementations (where the absolute budget constraint is not at the level of the manager) manager can align his boss and exceed the budget. However, this 'pushes the problem up' and the absolute budget constraint has to come in at some level or the other. 

In some organizations, apart from the budget constraint, there are also some guidelines given (e.g. a preferred range for salary increments) and if the manager violates any of those guidelines, while the computer would save his recommendation, an alert/flag would be visible to everyone in the reporting chain of the manager. The message to the manager is, you can deviate from the guidelines but the deviation would be highlighted and you should be able to justify if you are asked to do so (an additional relevance of 'CcMe'!). So, the manager empowerment is subject to monitoring through the information system. This way of working can extend (beyond budget cascades) to other cases of managerial discretion also (e.g. in the case of managerial discretion in the case of HR policies like travel policy, leave policy, promotion policy etc).

Of course, this is not a perfect solution. A manager who is willing to take risks can get away with a lot of dubious decisions - especially if the people who could do the monitoring are not so keen to look at the data and/or to question the manager. Also, people who run reports at the large group/corporate level (who might look at the data in the reports in isolation - without adequate understanding the context around a particular set of data) could trigger a lot of false alarms. This could end up wasting a lot of time and irritating the managers ! 

Now, let's come back to budget cascades (for bonus, salary increments etc.). It is interesting to note that the computer-control can't avoid psychological factors from affecting the decisions. Of course, there are things that could be done to make it psychologically easier for the manager to apply discretion. Let's look an example. 

Many managers find it psychologically difficult to 'take money away' from one person in the team so that it can be given to another person in the team. It sounds like 'robbing Peter to pay Paul'! This is especially so if the performance ratings have already been factored into the default recommendation or if the increment % (as compared to previous years/industry) or bonus % (as compared to target bonus) is low. 

One psychological trick is to populate a lower percentage/amount, as compared to that dictated by the budget and guidelines, as the default recommendation for each employee  (e.g.  2 % lower) so that manager would see some extra/un-allocated budget over and above the amount used for the default recommendations. This allows the manager to apply his discretion/allocate this 'extra' amount to the more deserving people in his team without  feeling guilty about taking money away from anyone! 

So, a combination of 'computer-control' and psychology might be better than 'computer-control' alone so long as the managers are human!

Any comments/ideas?